Ethan Allen, the legacy furniture brand that practically invented the vertical model in the home furnishings business, is on track to get its first new leader in more than four decades. And it’s safe to say the company—in business for almost 100 years and named for an increasingly forgotten Revolutionary War hero—will never quite be the same again.

With the announcement this week that it has begun a search for a new CEO to succeed Farooq Kathwari—a move seemingly prompted by an activist shareholder push to unseat the company’s longtime executive—Ethan Allen is poised for a major change, one way or another. Kathwari, who began working with the brand in 1973 and ascended to the top job in 1988, is widely credited with bringing the company into the 20th century, ushering in modernized products and stores. But according to some, he was never able to take the next steps to continue that transition into the 21st century, failing to prioritize e-commerce, appeal to younger shoppers or match the revenue growth of its competitors.

The company’s latest announcement positions the executive to step aside by next June 30, even as he remains on the board until later in the year. That’s if he and his team are able to win the upcoming proxy fight—if they lose, Kathwari’s departure will come sooner.

Ethan Allen’s new president, whoever that is, will need to address a deteriorating financial picture of falling sales. And in an upscale retail segment where brands like RH, Arhaus and others have captured the high-end consumer’s attention and dollars, the company’s new leader will have to oversee a reinvention every bit as radical as the one Kathwari initiated when he took over Ethan Allen four decades ago.

That’s when he succeeded the legendary Nat Ancell, who co-founded and ran Ethan Allen for more than 50 years, creating the vertical business model that became the template for so many other brands in the industry, from La-Z-Boy to Bassett to Ashley.

Kathwari, 82, is originally from Kashmir, the disputed region that India and Pakistan have fought over for eight decades, and he remains passionate about its prospects even as he spent most of his life in the U.S. It’s where he ran a rug importing company that started doing business with Ethan Allen in the Ancell years, leading to Kathwari’s involvement and eventual role as the largest individual shareholder of the company, with a reported approximate 8.4 percent of its outstanding stock. Today he remains widely respected and highly regarded within the furniture industry, even amid the campaign to unseat him.

That effort is coming from a shareholder of a different sort: Douglas Bergeron, who heads DGB Investment Inc., and on August 5 published an open letter calling for Kathwari’s retirement and the election of a new board of directors.

Following Ethan Allen’s announcement of a search committee for a new CEO, Bergeron, who owns or controls 5.2 percent of the company’s stock, responded that the news was “too little, too late.” He said the company “had years to develop a thoughtful succession plan … yet only when pressured by our campaign did the board’s ‘plan’ suddenly come to light.”

Kathwari has previously said a succession plan had not been discussed by the board, something that Bergeron pointed to repeatedly in his statements, saying he and his group were better suited to conduct a search. Bergeron has announced his own slate of board nominees and undertaken a new CEO search, noting: “It’s time for a fresh start. Ethan Allen’s next chapter requires a new Board that is capable of maximizing the Company’s potential.”

Ethan Allen revenues were just under $800 million 10 years ago and rose to as high as $818 million in the home furnishings industry’s post-pandemic boom in 2022. Sales have declined since—at about $579 million for 2026. (Compare those numbers to commonly cited competitors RH, which did around $2.1 billion, $3.8 billion and $3.4 billion for the same years; or Arhaus, which did an estimated $1.2 billion in 2022 and $3.4 billion in 2025.)

The company currently operates about 170 retail stores around the world, a mix of franchises and company-owned locations (as well as a joint venture for Ethan Allen stores in China), but it has moved to a much smaller store footprint over the past decade. “It’s a balancing act,” Kathwari told The Wall Street Journal in a May story about the brand’s downsizing strategy. “It is also something that we are studying to understand what size is appropriate.”

Kathwari has consistently defended Ethan Allen’s business strategy, praising its mix of domestic and overseas production. And in an interview on Bloomberg TV last month, he defended his leadership capability: “The fact is, if I believe that I don’t have the energy or the ability or the mind to run a business, then I should not be doing it,” he said in response to Bergeron’s accusations.

A share price that is off by nearly a third over the past two years may have indicated that it was time for a change, though as recently as last month Kathwari said the company’s board continues to have “confidence in our long-term strategy.”

Ethan Allen the soldier must have seen his fair share of battles, but perhaps never so treacherous as the one now unfolding at his namesake company.

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Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.